John A. Hobson

Imperialism, A Study

PART I
THE ECONOMICS OF IMPERIALISM

Chapter V
Imperialism Based on Protection

A business man estimating the value of an extension of his business will set the increased costs against the increased takings. Is it unreasonable that a business nation should adopt the same course? From this standpoint our increased military and naval expenditure during recent years may be regarded primarily as insurance premiums for protection of existing colonial markets and current outlay on new markets.

In order to test the finance of the new Imperialism, let us compare the growth of expenditure on armaments and wars since 1884 with the increased value of colonial trade:–

Year

Armaments
and War

Colonial Trade
(Import & Export
Trade with
Possessions)

£

£

1884

27,864,000

184,000,000

1885

30,577,000

170,000,000

1886

39,538,000

164,000,000

1887

31,768,000

166,000,000

1888

30,609,000

179,000,000

1889

30,536,000

188,000,000

1890

32,772,000

197,000,000

1891

33,488,000

193,000,000

1892

33,312,000

179,000,000

1893

33,423,000

170,000,000

1894

33,566,000

172,000,000

1895

35,593,000

172,000,000

1896

38,334,000

184,000,000

1897

41,453,000

183,000,000

1898

40,395,000

190,000,000

Now, though there are no means of ear-marking the expenditure which might rank as insurance upon old markets or that which is spent upon acquiring new markets, it is not unreasonable to saddle the new Imperialism with the whole of the increase and to set against it the value of the trade of the new acquisitions. For though it might be claimed that the aggressive commercialism of rival European States has raised the insurance rate upon the old markets, it cannot be contended that Great Britain’s expenditure on armaments need have increased had she adopted firmly and consistently the full practice of Cobdenism, a purely defensive attitude regarding her existing Empire and a total abstinence from acquisition of new territory. The increased hostility of foreign nations towards us may be regarded as entirely due to the aggressive Imperialism of the last thirty years, and the increased expenditure on armaments may, therefore, reasonably rank in a business balance-sheet as a cost of that policy.

So taken, this new expenditure is nothing else than a huge business blunder. An individual doing business in this fashion could not avoid bankruptcy, and a nation, however rich, pursuing such a policy is loaded with a millstone which must eventually drag her down.

In total contravention of our theory that trade rests upon a basis of mutual gain to the nations that engage in it, we have undertaken enormous expenses with the object of “forcing” new markets, and the markets we have forced are small, precarious, and unprofitable. The only certain and palpable result of the expenditure has been to keep us continually embroiled with the very nations that are our best customers, and with whom, in spite of everything, our trade makes the most satisfactory advance.

Not only are these markets not worth what they cost us, but the assumption that our trade would have been proportionately less had they fallen into the hands of rival and Protectionist nations is quite groundless. If, instead of squandering money upon these recent territorial acquisitions, we had let any or all of them pass into the possession of France, Germany, or Russia, in order that these countries might spend their money, instead of us spending our money, in acquiring and developing them, is it certain that our foreign trade would not have grown by at least as much as our colonial trade might have shrunk? The assumption that there is only a given quantity of trade, and that if one nation gets any portion of it another nation loses just so much, shows a blind ignorance of the elements of international trade. It arises from a curiously perverse form of separatism which insists upon a nation keeping a separate account with every other nation, and ignoring altogether the roundabout trade which is by far the most important business of an advanced industrial nation.

France seizing Madagascar practically extirpates direct British trade with the Malagasy; Germany, by her occupation of Shan-tung, deprives us of all possibility of trade with this Chinese province. But it by no means follows that France and Germany can or will keep to themselves the whole advantage of these new markets. To make any such supposition implies a complete abandonment of the principles of Free Trade. Even were the whole of China portioned out among the other industrial nations, each imposing tariffs which virtually prohibited direct trade between Great Britain and China – the most extreme assumption of a hostile attitude – it by no means follows that England would not reap enormous benefits from the expansion of her foreign trade, attributable in the last resort to the opening up of China. Even the feeblest recognition of the intricacies of foreign trade should make us aware that an increased trade with France, Germany, or Russia, either directly or through other nations trading with them, might give us our full share of the wealth of Chinese trade, and prove as beneficial as any direct share of trade with China which at great expense and peril we might secure. The assignment of spheres of influence in China or in Africa to France, Germany, or Russia, which they may seek to monopolise for purposes of trade, does not imply, as seems to be believed, a corresponding loss of markets to England. The intricate and ever-growing industrial co-operation of the civilised nations through trade does not permit any nation to keep to herself the gain of any market she may hold. It is not difficult to conceive cases where another nation might enjoy a larger share of the results of a trade than the nation which owned the private markets of this trade.

These are or were the commonplaces of the economics of Free Trade, the plainest lessons of enlightened common sense. Why are they forgotten?

The answer is that Imperialism repudiates Free Trade, and rests upon an economic basis of Protection. Just in so far as an Imperialist is logical does he become an open and avowed Protectionist.

If the fact of France or Germany seizing for its exclusive use a market which we might have seized necessarily reduces our aggregate external trade by the amount of this market, it is only reasonable that when we seize a territory we should take the same means to keep its market for ourselves. Imperialism, when it has shaken off the “old gang” of politicians who had swallowed Free Trade doctrine when they were young, will openly adopt the Protectionism required to round out this policy.

Imperialism naturally strives to fasten to the mother country the markets of each new territorial acquisition, convinced that only by such separate increments can the aggregate of our trade grow; and by the success of this policy it must justify the enormous national outlay which Imperialism involves. Free Trade trusts for the increase of our foreign trade to the operation of the self-interest of other trading nations. Her doctrine is that, though it were better for us and for them that they should give us free admission to their colonial and home markets, their protective tariff, even though it prohibits us from trading directly with their colonies, does not shut us out from all the benefits of their colonial development. Through the ordinary operation of competition in European markets the rubber trade which France does in East Africa helps to increase the supply and to keep down the price of “rubber” for English consumers, just as the bounties which continental countries pay to sugar producers enable British boys and girls to enjoy cheap sweets.

There is, then, nothing vaguely hypothetical about these indirect gains. Every business man can trace certain concrete advantages of goods and prices which come to us from the development of colonies by Protectionist countries. The “open door” is an advantage to our trade, but not a necessity. If we have to spend vast sums and incur vast risks in keeping “doors open” against the wishes of our best customers, it is more profitable to let them close these doors and take our gain by the more indirect but equally certain processes of roundabout trade. At present Great Britain is in a stronger position than any other nation to practise this policy of abstinence, because she possesses in her carrying trade by sea a most effective guarantee that she will obtain an adequate share of the net gains from new markets opened up by foreign nations. Though no complete statistics are available, it is known that a very large proportion of the trade, not only between England and foreign countries, but between foreign countries trading among themselves and with their possessions, is carried by British ships. So long as this continues, England, apart from her share obtained in roundabout trade, must participate directly and in a most important manner in the trade advantages of foreign markets belonging to our European trade competitors.

These considerations ought to make us willing that other nations should do their share of expansion and development, well contented to await the profit which must accrue to us from every increase of world-wealth through ordinary processes of exchange. We have done our share, and more, of the costly, laborious, and dangerous work of opening up new countries to the general trade of Western industrial nations; our recent ventures have been more expensive and less profitable to us than the earlier ones, and any further labours of expansion seem to conform to a law of diminishing returns, yielding smaller and more precarious increments of trade to a larger outlay of material and intellectual capital. Have we not reached, or even passed, the limit of the most profitable outlay of our national energy and resources? Will not enlightened self-interest impel us to leave to other active and ambitious nations – France, Russia, Germany, America – the work of developing new tropical or sub-tropical countries? If it is necessary that Western industrial civilisation shall undertake the political and commercial management of the whole world, let these nations take their share. Why should we do all the work and get so little from it? On the assumption that backward countries must be developed by foreign countries for the general good, a reasonable economy of power will apportion the work which remains to the “Imperialism” of other nations. Even if these other nations were disposed to shirk their share, it would pay us better to persuade them to undertake it rather than further to load our overladen shoulders. Since these other nations are not only eager to do their share, but by their jealousy at our undertaking their work continually threaten to wreck the peace of Europe, it seems sheer madness for Great Britain to weaken herself politically and financially by any further process of expansion.